Page 40 - The Bootstrapper Bible

ChangeThis When you sell through existing retailers, they add a lot of the value that the consumer re- ceives. They stock it. They make it convenient. They offer the reliability that their brand name connotes (itʼs guaranteed). And because they add so much value, they get to keep a lot of the profit. Look at it from their point of view. Macyʼs, for example, knows its going to sell 10,000 jackets this year. They can come from firm x or firm y. The Macyʼs purchasing agent is going to squeeze x and y as hard as she can to extract as much profit for Macyʼs as she can. Don’t fall into the trap of doing the easy business, or the fun business, or the sexy business. If youʼre selling a custom service or a high-priced good, consider selling it directly. That cuts out lots of middlemen, and leaves it in your hands. If you can make this self-priming, youʼve gone a long way toward making your company successful. Which leads to the exit strategy. It’s terrific. In most products, the single largest step in the value chain is the last one—those four items in that list. If you and your company handle that last step, youʼve earned the right to the profit that comes with it. For example, an architect who brings in a contractor can expect to extract more profit (or sav- ings for his customer) than the contractor who got the job and then brought in the architect. Obviously, some service businesses lend themselves to direct sales more than consumer products do. What if youʼve got your heart set on bringing a fantastic board game to market? Are you doomed to be at the mercy of mass marketers and nationwide toy chains? Not at all. There are lots of places that sell board games that arenʼt Toys R Us. Catalogs, for example, can help you reach large numbers of consumers without taking personal risk. | iss. 6.01 | i | U | X | + | Seth Godin is the author of Purple Cow. BUY it here. h 40/103 f